AN OVERVIEW: TELECOM SECTOR

Telecommunications/information and communication technologies (ICTs) play an increasingly

critical role in our economies and society. They have proven to be a powerful driver of innovation,
growth and productivity globally. Broad access to telecommunications/ICTs provides significant
opportunities for improving government public services, healthcare, education and the environment.
Telecommunications/ICTs also open new channels for sharing of global knowledge resources and
the free flow of ideas and opinions. However, to harness the potential of telecommunications/ICTs,
governments and other stakeholders have to provide an enabling policy environment and supporting
infrastructure that are robust and responsive to a shifting set of challenges and opportunities.

Over the last five years, the level of access to telecommunications/ICTs has improved significantly
across the world. Mobile cellular has proven to be the most rapidly adopted technology in history,
and the total number of broadband subscriptions has grown more than threefold. Yet, there still
remains a substantial broadband divide (see below), both within and among countries. Particular
efforts will need to be made to support availability of infrastructure and services in underserved and
rural areas, in particular in developing countries.

International Market Drivers

• Post-recession recovery 2010-13 dominant driver for next four years.

• Wireless subscriptions will increase 1.4B to 5.5B during next four years, a cumulative 33%
advance.

• Large gains in broadband and wireless penetration will fuel growth in Asia Pacific.

• Surging broadband market and wireless growth will drive spending in Latin America.

• Middle East/Africa will be fastest-growing international region.

TABLE 1.1 GLOBAL TELECOMMUNICATIONS REVEENUE ($ TRILLION)

YEARS REVENUE ($ TRILLIONS)
 2003 2.44
2004 2.67
2005 2.99
2006 3.35
2007 3.73
2008 4.02
2009 3.87
2010 4.03
2011 4.30
2012 4.61
2013 4.94
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.1

SOURCE: Self constructed

Global telecommunications spending will grow at a 6.3% percent compound annual rate to $4.9T in
2013 from $3.9T in 2009.

INTERNATIONAL MARKET
Further According to Telecommunication Industry Association (TIA), the International
telecommunications revenue for service providers will continue to increase over the next four years,
while revenue for telecommunications equipment is expected to resume growth in 2011.

Broadband, Wireless, Public Network equipment are fuelling growth.

Wireless Subscribers are growing rapidly, with the fastest growth occurring in the Middle East/
Africa and Asia Pacific Regions.

FIGURE 1.1
SOURCE: (TIA), 2010 policy playbook.
TABLE 1.2 LEADING COUNTRIES BY OVERALL TELECOMMUICATIONS
REVENUE, 2009 ($ BILLIONS)
COUNTRY REVENUE ($ BILLIONS)
China 335
Japan 200
Germany 192
United Kingdom 172
Brazil 144
Italy 122
France 113
India 107
Mexico 80
Spain 77
South Korea 77
Russia 70
SOURCE: TIA’s 2010 ICT Market Review and Forecast
CHART 1.2

SOURCE: Self Constructed

The top 12 countries as a group accounted for 47% of total international telecommunications
spending in 2009.
CHART 1.3: SPENDING GROWTH BY COMPONENT

SOURCE: TIA’s 2010 ICT Market Review and Forecast

In 2009 Equipment market fell much faster than services market.

TABLE 1.3: TOP 12 IN BROADBAND

COUNTRY PENETERATION (%)
SWEDEN 38.63
DENMARK 36.72
NORWAY 35.40
NETHERLANDS 34.58
SWITZERLAND 33.53
FINLAND 33.33
ICELAND 32.98
SOUTH KOREA 32.36
GERMANY 30.61
LUXEMBERG 30.49
BELGIUM 29.37
 UNITED KINGDOM 29.45
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.4:

SOURCE: Self-constructed

Europe had the seven countries in the world and 11 of the top 12 in broadband penetration.
TABLE 1.4: INTERNATIONAL INTERNET SUBSCRIBERS (MILLIONS)

YEARS BROADBAND DIAL-UP

2003 62.32 181.67
2004 105.59 171.25
2005 152.16 180.01
2006 199.03 172.04
2007 254.49 193.92
2008 311.51 214.06
2009 363.16 203.56
2010 414.63 190.15
2011 456.42 174.79
2012 523.66 159.8
2013 586.13 144.96
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART: 1.5

SOURCE: Self-constructed

Because of the broadband surge during the past four years, dial-up had 44% fewer subscribers in
2009, and by 2013 there will be 75% fewer subscribers.
TABLE 1.5: TELECOMMUNICATIONS REVENUE IN BRIC AND OTHER
INTERNATIONAL MARKETS ($ MILLIONS)

COUNTRY 2005 2006 2007 2008 2009 2010 2011 2012 2013
10530 12026 14093 14393 15870 17633 18691 20072
BRAZIL 88203 3 8 1 8 5 7 9 0

RUSSIA 47804 56212 59384 71032 70466 70668 74835 80724 87082
 10455 10782 11488 13631 15741 18006
INDIA 52031 80001 90015 7 5 4 3 1 8
20293 22746 28409 34286 33505 37127 40872 44901 48608
CHINA 3 8 1 7 3 4 2 1 4
39097 46898 55375 65938 65728 71553 79620 87406 95395
BRIC TOTAL 1 4 8 7 2 1 7 5 4
OTHER
INTERNATIO
NAL 17615 19561 21737 23127 22261 23176 24715 26521 28446
MARKETS 20 55 38 91 78 02 47 93 16
21524 24251 27274 29721 28834 30331 32677 35262 37985
TOTAL 91 39 96 78 60 33 54 58 70
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.6

SOURCE: Self constructed

BRIC telecommunications spending will total $954B in 2013, comprising 25.1% of total
international telecommunications spending, up from 22.8% in 2009 and 16.5% in 2003.
TABLE 1.6 OVERALL ICT SPENDING IN ASIA
YEARS REVENUE ($ BILLIONS)
2003 591
2004 649
2005 728
2006 842
2007 986
2008 1122
2009 1082
2010 1162
2011 1271
2012 1384
2013 1499
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.7
SOURCE: Self-constructed

For the 2010-13 period, the overall telecommunications market is set to expand at an 8.5%
compound annual rate, rising to $1.5T from $1.1T in 2009.

TABLE 1.7: WIRELESS SUBSCRIBER GROWTH IN ASIA

YEARS CHINA & INDIA REST OF THE REGION
2003 304 260
2004 387 309
2005 484 371
2006 627 467
2007 781 635
2008 1035 805
2009 1250 883
2010 1420 962
2011 1590 1032
2012 1750 1093
2013 1890 1145
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.8

SOURCE: Self- constructed

A projected 340 million increase in India and a 300 million advance in China will bringing total
subscribers in the two countries to 1.89 billion by 2013, 62% of all wireless subscribers in Asia
Pacific.
TABLE 1.8: BROADBAND PENETRATION IN ASIA
YEARS CHINA REST OF THE REGION
2003 8.60 28.00
2004 24.00 34.85
2005 36.00 42.73
2006 44.90 51.70
2007 58.70 60.64
 2008 75.80 68.97
2009 93.55 77.26
2010 115.00 84.25
2011 130.00 92.89
2012 145.00 102.74
2013 160.00 115.15
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 1.9

SOURCE: Self- constructed

According to TIA’s projection the number of broadband subscribers to rise to 160 million in China
by 2013, accounting for 64% of the total projected growth in broadband subscribers in Asia Pacific.

TABLE 2.1: WIRELESS SUBSCRIBERS (IN MILLIONS)

YEAR INDIA CHINA
2003 33.70 270.00
2004 52.20 334.80
2005 90.10 393.40
2006 166.10 461.10
2007 233.60 547.30
2008 346.90 688.00
2009 450.00 800.00
2010 520.00 900.00
2011 610.00 980.00
2012 700.00 1050.00
2013 790.00 1100.00
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART 2.1

SOURCE: Self- constructed

TABLE 2.2: LANDLINE SUBSCRIBERS (IN MILLIONS)
YEAR INDIA CHINA
2003 42.00 262.70
2004 46.20 311.80
2005 50.20 350.40
2006 40.80 367.80
2007 39.40 365.40
2008 37.90 345.00
2009 37.30 335.00
2010 37.00 330.00
2011 36.50 325.00
2012 36.00 320.00
2013 35.50 315.00
SOURCE: TIA’s 2010 ICT Market Review and Forecast

CHART: 2.2 LANDLINE SUBSCRIBERS (IN MILLIONS)

SOURCE: Self constructed

SOME KEY FACTS:

• China is the largest broadband market in the world, with 93.6 million subscribers.

• According to TIA forecast, by 2013, China will represent 64% of the Asia Pacific region’s
total broadband subscriber growth.

• China has made largest wireless market in the world, with more than 800 million wireless
subscribers. By 2013, it is expected to grow another 300 million subscribers.
• In November 2008, China passed an economic stimulus plan of approximately $54 billion
(9.3%) will be invested in 3G networks, next-generation Internet, and digital television.

• India remains an important market for ICT companies.

• In 2009, India had the second largest wireless market in Asia Pacific with 450 million
subscribers, which is projected to reach 790 million by 2013.

• India added an average of 8.5 million wireless subscribers per month in 2009.

• The government has auctioned 3G licenses. The Telecommunications Regulatory Authority

of India (TRAI) took some revolutionary reforms like per-second billing instead of per-
minute billing, which would lower monthly fees and stimulate usage. Some new players
entered into the market in 2010, increasing competition and putting further pressure on
prices. A number of companies began cutting prices in 2009 as competition began to heat
up.
The telecom services have been recognized the world-over as an important tool for socio-economic
development of a nation. To India being the second fastest growing economy, the growth of
telecommunication becomes indispensable as it not only enhances efficiency but also has multiplier
effect on an economy. The same could be observed with the various steps taken by the Government
of India to build the world class telecommunications infrastructure in the country.
Present Status of Telecom Sector
• Indian Telecom market is one of the fastest growing markets in the world.

• The number of telephone subscribers in India increased to 653.92 Million at the end of May

2010; it is the second largest network in the world after China.

• About 15 million connections are being added every month.

• The target of 500 million telephones by 2010 has been achieved in September 2009 itself.

• Wireless telephones are increasing at faster rate. The share of wireless telephones as on

December 31, 2009 is above 93% of the total phones.

• The share of private sector in total telephone is about 82.33%.

• Overall tele-density has reached around 55.38% as 31st May 2010. Urban tele-density

crossed 100% mark whereas rural tele-density is at 21.19% which is also steadily

increasing.

• Broadband connections increased to 9.24 million by 31st May, 2010.

TABLE 3.1: GDP CONTRIBUTION ANNUALY

Indicator Units Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
GDPfc (at constant 99-00 prices
(new series)) Rs.crore 2388768 2616101 2871118 3129717 3339375
GDPfc (at constant 99-00 prices
(new series)) % 100 100 100 100 100
GDPfc (at constant 99-00 prices %
(new series)) (YOY) 7.47 9.52 9.75 9.01 6.7
GDPfc: Service (at constant 99-00
prices (new series)) Rs.crore 1279195 1414600 1573485 1744238 1912871
GDPfc: Service (at constant 99-00 % 53.55 54.07 54.8 55.73 57.28
prices (new series))
GDPfc: Service (at constant 99-00 %
prices (new series)) (YOY) 9.13 10.59 11.23 10.85 9.67
GDPfc: Communication (at
constant 99-00 prices (new series)) Rs.crore 86999 110326 140891 176894
GDPfc: Communication (at
constant 99-00 prices (new series)) % 3.64 4.22 4.91 5.65
GDPfc: Communication (at %
constant 99-00 prices (new series)) (YOY) 24.48 26.81 27.7 25.55

TABLE 3.2 AGGREGATE MARKET SHARE OF TOP 15 COMPANIES

Rs. Rs. Rs. Rs. Rs.
Crore Crore Crore Crore Crore
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09
Company Name Sales Sales Sales Sales Sales
Bharti Airtel Ltd. 8094.89 11228.68 17794.44 25703.51 34014.29
Bharat Sanchar Nigam Ltd. 33623.14 38101.74 36500.91 32757.5 30222.96
Reliance Communications Ltd. 0 4.19 12767.05 14795.13 15089.58
Reliance Communications Infrastructure Ltd. 2872.04 6571.81 9079.6 9774.41 10527.6
Idea Cellular Ltd. 1625.43 2007.07 4366.4 6719.99 9857.08
Vodafone Essar South Ltd. 585.89 1231.31 2387.15 5453.51 7063.17
Tata Teleservices Ltd. 1351.26 2582.57 4532.16 5268.81 5719.14
Mahanagar Telephone Nigam Ltd. 5597.67 5571.31 4916.32 4730.99 4463.71
Tata Communications Ltd. 3303.04 3791.17 3757.32 3283.3 3749.43
Vodafone Essar Cellular Ltd. 484.4 396.36 802.57 2351.11 3446.13
Vodafone Essar Digilink Ltd. 393.08 665.77 1276.71 2778.42 3200.23
Vodafone Essar Ltd. 1190.81 1392.6 1640.19 2735.31 2551.3
Vodafone Essar Gujarat Ltd. 726.65 901.96 1330.15 2282.3 2303.98
Vodafone Essar Mobile Services Ltd. 1062.09 1309.93 2188.27 2050.1
Tata Teleservices (Maharashtra) Ltd. 807.47 1096.01 1423.96 1783.84 2041.08
TOTAL 60655.77 76604.64 103884.9 122606.4 136299.8
Aggregate Industry sales 67460.42 84957.47 116501.3 138485.8 150564.5
% Share 89.91 90.17 89.17 88.53 90.53

SOURCE: Prowess, CMIE, July 2010

CHART 3.1: SERVICE PROVIDER WISE MARKET SHARE IN WIRELESS

SEGMENT AS ON 31ST MAY 2010

SOURCE: TRAI, Press Release 28th June 2010

The Bharti Airtel Ltd. is holding the largest

CHART 3.2: SERVICE PROVIDER WISE MARKET SHARE IN WIRELINE
SEGMENT AS ON 31ST MAY 2010

SOURCE: TRAI, Press Release 28th June 2010